Investment Considerations

This post is related to the hidden trap of Convertible Debt and Liquidation Preference multiples.   Yesterday while talking to a Founder he informed that his Series A investors are getting 1X Liquidation Preference but his Convertible Note (CN) investors are getting more than 4X Liquidation Preference.   Let’s start with a simple example.   Seed Round Convertible Note Dynamics: - Principal Amount- $500k - Interest Rate= 10% - Discount- 20% - Valuation Cap= $2.5m - Maturity Years= 2   - CN Principal plus Accrued Interest= $500k*(1+10%)^2= $605k   Series A Round Dynamics: - Pre-money Valuation of the company= $10m - Share Price= $4 - 1X Liquidation Preference (not including Participating/ non-participating for the simplicity purpose)   CN Conversion Dynamics after Series A: - Share Price (Valuation Cap option)= $4*($2.5m/ $10m)= $1 - Share Price (Discount option)= $4*(1-20%)= $3.2 - CN Investor will choose the Valuation Cap Option   - Number of Shares with CN Investors= $605k/ $1= 605,000 - Current Share Price= $4 - CN Investors Investment Value= 605,000*$4= $2.42m   - CN Investors Initial investment= $500k - CN Investors Investment Value after Series A= $2.42m - They are getting $2.42m/ $500k= 4.84X return whereas the Series A investors are getting only 1X Liquidation Preference. - This is excellent for the CN Investors but not good for the Founders   And that’s why a Founder should always keep the liquidation preference multiples in check.   Here is how.   1. Was going through an article written by Mark Suster where he offered a suggestion for the Founders which they should include in the agreement.   It goes like this: “If this note converts at a price higher than the cap…your stock [will] be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”   2. Issue sub-series of preferred stock.   Founders have an alternative approach to safeguard themselves from the impact of multiple liquidation preferences.   They can incorporate a provision in the convertible note that outlines the creation of a distinct sub-series of preferred stock exclusively for the seed-round noteholders upon conversion.   This unique sub-series is specifically designed to counteract artificially-inflated liquidation preferences and provide added protection to the founders.   Instead of granting 605,000 shares of Series A to the Seed-round convertible noteholders, allocate them 605,000 shares of a new stock series called Series A-2.   Series A-2 would possess identical characteristics to the original Series A, except for the liquidation preference.   While Series A holds a per-share liquidation preference of $4.00, Series A-2 would have a reduced liquidation preference of $1.00 per share. This resolution effectively resolves the issue at hand.   That’s it for today.   I’m Fazlur Shah I’d love to connect with you all. Click my name + follow + 🔔    #startups #entrepreneurship #venturecapital #investing #finance

The day after: with election uncertainty behind us, investors will focus on future clarity on policy priorities and implementation vs. what was proposed. 5 quick takeaways from me, David Kelly and Stephanie Aliaga: 1. A Republican controlled Congress increases the potential for significant policy changes, including tax cuts, deregulation and higher tariffs. The size of the Republican majority in both chambers will be key, as will Trump’s own priorities once in office. 2. U.S. equities remain supported, particularly on the back of robust growth and broadening earnings. However, risks around higher long-end yields and tariff implications don’t seem to be reflected in market prices and could generate volatility ahead. 3. At times, policy and market returns can take diverging directions. The performance of the Energy Sector and Clean Energy under the Trump and Biden administrations are a great example (see chart below). There's more to stock returns than politics and policy - macro context, global commodity prices, interest rates, risk appetite, and starting valuations matter more over a longer stretch of time. 4. Bond yields likely to remain volatile and elevated on the back of fiscal concerns, while trade uncertainties contribute to dollar strength and FX volatility. 5. Markets can thrive under various government configurations and diversification can help balance portfolios against unknown risks. #markets #economy #election

In stark contrast to the record real capital investment in computers and electrical equipment, real capital investment for other sectors that matter more to trucking companies from a freight generation standpoint are performing dismally so far in 2025. Two charts below. Thoughts: •The top chart shows real agricultural equipment investment. Investment was down 20% year-over-year in Q1 2025 and 14% in Q2 2025. These are two of the weakest readings over the last 18 years (data stretches back to Q1 2007). The most recent investment peak occurred during 2021 and 2022 when commodity prices for corn and soybeans were far stronger. Farmers today face many challenges including (i) China’s reluctance to purchase new crop soybeans that are about to be harvested; (ii) low commodity prices (outside of slaughter cattle); and (iii) labor availability due to changes in immigration enforcement. All these factors bode ill for domestic farm equipment producers like John Deere, which is made more problematic because tariffs are substantially raising manufacturing costs (making US exports of farm equipment less competitive). •The bottom chart shows real capital investment for mining & oilfield machinery. Despite repeated statements of “drill, baby, drill”, capital investment has fallen in 2025. Q2 2025’s reading was particularly bad, coming in a -27% year-over-year. Low crude oil prices, more OPEC production, and oil drillers increasingly focusing on return on investment (as opposed to sinking as many wells as quickly as possible like they did in 2011-2014) mean that we won’t ever see the type of capital investment in this equipment that we did 11 years ago. Furthermore, on the mining front, coal mining certainly isn’t a growth sector (output today is down 25% from 2017 and down 50% from 2006: https://lnkd.in/gBG-MMA6). Implication: one observation that fascinates me is how many people believe a change of the resident of 1600 Pennsylvania Avenue can somehow change the workings of underlying economic mechanisms. People can throw out slogans like “drill, baby, drill”, but at the end of the data, fundamental economic mechanisms and principles drive outcomes. For firms like trucking companies trying to forecast demand, don’t let political biases get in the way of economic reality. For example, back in December and January, I was one of the few commentators who predicted how detrimental major tariffs would be to what we all thought would be a much stronger year in the for-hire trucking sector. Other commentators disagreed. It turns out I was far more correct than the pro-tariff perspective ended up being. Why? Because my predictions are grounded in underlying economic theory and empirical findings, whereas the other perspective wasn’t. If people can’t provide multiple peer reviewed studies to support their predictions, it’s troubling to say the least. #supplychain #shipsandshipping #freight #trucking #truckload #economics

You know investors now definitely see sports as an asset class when J.P. Morgan, Goldman Sachs, and Morgan Stanley all decide to allocate time and resources to launching sports-focused teams / reports / indexes. 📈 ➡️ J.P. Morgan   6 months ago, J.P. Morgan launched a new "sports investment banking coverage group" to cover investments in sports franchises for their clients around the globe.   Fred Turpin, J.P. Morgan’s Global Head of Media and Communications Investment Banking declared then: “With top sports franchises in the US and Europe now valued at more than $400 billion in total, sports have become an increasingly large asset class, attracting more and more institutional investors.”   ➡️ Goldman Sachs   Last month, GS released a report called "Changing the Game: Unlocking new opportunities in sports" in which they picture sports as an "outperforming asset class generating opportunities for corporates and investors to diversify their assets and unlock value."   Here's a quote from Dave Dase, Global Co-Head of Sports Franchise:   "The days of just selling tickets and concessions are over; sports are rapidly expanding into 24/7 data management platforms that bring best-in-class customization - helping teams grow and increase the monetization of their fan base across all business verticals.”   Trends quoted in the report include:   📱 Evolving media landscape shaping a new era for sports rights   🤝 Minority stakeholders becoming an essential part of the capital structure in parallel with soaring sports teams’ valuations 🎮 Expanding range of sports-adjacent businesses 🥅 Modern-day stadiums generating new avenues for monetization   ➡️ Morgan Stanley And now, Morgan Stanley’s wealth management division is launching an investment index tied to sports leagues.   Name of the index?   The "Parametric Custom Core Sports League" strategy.   The portfolio's holdings will consist of 250 to 400 securities from companies that have sponsorship, media, advertising deals, and other associations with major sports leagues, including the NBA, WNBA, NFL, NWSL, MLS, MLB, LPGA, PGA, NHL, US Open Tennis, F1, Nascar, and college basketball.   The portfolio is aimed at high net worth sports fans with a $250k investment minimum.   It will allow them to invest in a curated index of companies with strong sponsorship, media and advertisement ties to the most prominent sports leagues.   Sandra Richards, Managing Director and Head of Morgan Stanley’s Global Sports and Entertainment Division, stated:   “We see the demand from our clients that are asking about ways to invest in sports. And it’s going to continue.”   To be noted that they'll use Nielsen Sports as its data source to track the activity, spending and visibility of the companies with exposure to professional sports leagues.

CPOs must address low utilization to find funding. More infrastructure isn’t the answer, owning the charging and driving experience is. For years, they have followed the same playbook: • Buy land • build stations • wait for volume to grow The assumption was straightforward: secure prime locations now, and as EV adoption increases, those stations will become essential. But here's where we are today: • Utilization rates are averaging 17%, meaning most chargers sit empty most of the time. • Investors are looking for more than just infrastructure expansion—they want to see sustainable business models. • Variable pricing only increases demand if drivers find those stations in the first place. You increase utilization by guiding more drivers to your station of choice. I know, #KnowledgeBomb. But you probably don't know that this isn't magic; it's just a result of owning the driving and charging experience through preferential EV routing. Today, Chargetrip drives 30GWh of energy demand to stations monthly, and EMSPs and CPOs benefit. Drivers make charging decisions before they start driving. So that's where you capture potential charging sessions. Think about how other industries operate: • Hotels don't wait for guests to stumble upon them, they optimize bookings through search and distribution. • Airports actively attract flights by negotiating routes and offering incentives. • Gas stations don't rely on location alone, they use branding, loyalty programs, and pricing strategies to drive traffic. EV charging needs to do the same. Drivers don't pick stations at random. Their choices are shaped by a search process that considers: • Price • availability • reliability • location and amenities And all of that happens before they even start driving. The real opportunity isn't in waiting for drivers to show up - it's in routing them to your network before they make a decision. CPOs who integrate routing into their strategy won't have to depend on utilization improving over time. They can actively steer demand to their stations, ensuring consistent revenue and higher asset efficiency.

Who Controls the Land Controls the Future of Farming Lack of land access is another of the main obstacles to regenerative agriculture in Europe. Farmers who want to build soil health, restore biodiversity, and farm in a way that benefits both people and the planet often face an impossible hurdle: they don’t own the land they farm - or they can’t afford to buy it. Why Access to Land Is the Problem 📈 Farmland prices differ significantly across Europe, but are rising throughout. In 2022, the cost of a hectare of arable land ranged from €3,700 in Croatia to €233,230 in Malta. England and Wales hit record highs in early 2024, driven by speculation, government funding, and private investment in environmental schemes. ⏳ Leases are too short for long-term stewardship. In Ireland, 91% of rented farmland is under 11-month (!) “conacre” agreements. In Finland, nearly 40% of leases last just five years. If you don’t know if you’ll be farming the same land in a few years, why invest in soil restoration or agroforestry? 🏦 Investment is a double-edged sword. There's a significant rise in institutional money flowing into farmland, partly to support regenerative agriculture. But this also drives up prices and consolidates land ownership, making it even harder for small farmers and new entrants to get a foothold. What good is ecological regenerative management if it erodes the social fabric of the place? What are the Opportunities for Change? ✅ Stronger lease protections. France’s Statut du fermage mandates minimum 9-year leases, giving tenant farmers stability to invest in soil health. Similar policies across Europe would make regenerative agriculture a viable long-term choice. ✅ Tax incentives for long leases. Ireland offers tax breaks for landowners leasing for 5 to 15 years or more. The U.S. has similar programs under its Conservation Reserve Transition Incentives Program (CRP-TIP). These strategies work. ✅ Community and cooperative land models. Across Europe, innovative land ownership structures are breaking the cycle of speculation and exclusion: Lenteland (Netherlands): Community-owned cooperatives steward farmland regeneratively. Terre de Liens (France): Buys farmland and leases it long-term to sustainable farmers. Regionalwert AG (Germany): A citizen investment model funding regional organic farms. And the new Land Stewards (Italy): A program by regenerartive farmers for regenerative farmers to purchase land together. Regenerative agriculture is about more than cover crops and no-till. If we want a resilient, regenerative food system, we need to think about ownership, access, and incentives. What models are working in your region? From private initiatives to national policies to cooperative models, we have many solutions already. Let's list them below. (Photo below of Herberto Brunk's beautiful Herdade das Escravides de Baixo in Portugal)

Always Run the Numbers When Making Financial Choices… or Work Longer and Have Less in Life   "My gut feeling is...” are the four most dangerous words you can hear when making a financial decision. Avoid an advisor who uses this phrase. Due to the magic of compounding, even choices of $50-$100 per month can have a tremendous effect on your wealth over time. This can result in you working harder, longer, and having less in life.   Running the numbers means putting pencil to paper and calculating all the options of a financial choice. How much will this reduce or increase your cash flow or affect the balance you have in the bank or investment account? Any tax effect?   Most people spend more time choosing pizza toppings than spending the time analyzing the options in a financial decision. Big-ticket choices like buying or leasing a car, renting or buying a house, or financing a home renovation can significantly impact future wealth. Most decide without consulting an advisor or calculating the long-term effect on their wealth.    In general, the best financial decision is the one that increases your cash flow or grows your bank and investment accounts. Sounds simple, right? Most screw this up.   An example: You have a choice between buying or leasing a car. The dealership offers you a choice of leasing it for $673/mth for 5 years or buying it for $40,000 via financing at 6% through them over the same period, but you must put 10% or $4,000 down. Your monthly payment to buy would be $693/mth.    By leasing, you save the $4,000 deposit plus $20/mth, or $240/yr. Keeping the money in your investment account and adding $240/yr, assuming an 8% return, results in: · $7,440 at 5 yrs · $16,514 at 10 yrs · $36,655 at 20 yrs · $180,593 at 40 yrs.    You decide to invest the money in your 401(k) at work. You save income taxes of 25% of what you contribute or $1,000 the first year (25% of $4,000) plus $60 (25% of $240) annually, and save the tax savings in the 401(k). You also get a 50% match on the 401k during that time. This adds an additional $1,680 you have saved and equates to: · $9,110 at 5 yrs · $20,220 at10 yrs · $45,000 at 20 yrs · $221,000 at 40 yrs.    If you leased a car every five years, eight times in your life, this could be a multi-million-dollar decision! It could mean working less years or having more wealth to spend in retirement.   Owning the car, you would get some residual value in five years but not much, especially if you drive a lot.   There may be other factors that might prove buying better. The point is to analyze and run the numbers—they might surprise you.   If you need professional help, get it. You could lose a million dollars or work harder, longer, and having less wealth in your life.   #DecisionMaking #Financialplanning #CashFlow   Al Zdenek. Author, Mentor, Entrepreneur. Follow me for stories on my 50 years of navigating business and personal life experiences. Also visit www.AlZdenek.com. Please Repost. Thanks!

Is the EV bubble bursting? Nikola, once valued higher than Ford at $30 billion, just filed for Chapter 11 bankruptcy after failing to find a buyer. It's a stark reminder that hype alone isn’t enough to sustain a business. 🔍 What went wrong? Nikola’s collapse isn’t just about one company—it reflects deeper challenges in the EV industry. Let’s break it down: ✅ Overpromising, underdelivering – In 2020, Nikola claimed to be a leader in hydrogen-powered electric trucks. But when investors realized the technology wasn’t ready, confidence plummeted. – Its founder was later convicted of fraud, further damaging credibility. ✅ Market uncertainty – The EV sector is growing, but adoption isn’t happening as fast as expected. High costs and charging infrastructure gaps are still major barriers. – Companies like Fisker and Lordstown Motors are also struggling. ✅ Capital-intensive business – Developing EVs requires huge upfront investments. Without steady revenue, many startups run out of cash before they can scale. – Even giants like Tesla had to fight to survive in their early years. What about sustainability? The failure of startups like Nikola doesn’t mean the shift to sustainable transportation is failing but it does show that real sustainability requires more than just a vision. It needs practical execution. ✔ A truly sustainable EV ecosystem must include: 🔹 Circular economy principles – Recycling batteries and reducing carbon footprints. 🔹 Smarter infrastructure investments – Faster, more efficient charging networks. 🔹 Strong environmental policies – Regulations that help companies scale sustainably. 🚨 What does this mean for the future of EVs? The industry isn’t doomed, but we might see fewer startups and more consolidations. To succeed, companies need: 🔹 Sustainable business models – Not just exciting ideas, but real execution. 🔹 Strong financial planning – Cash flow is king. 🔹 Consumer trust – Without it, no amount of innovation matters. 💬 What’s your take? Do you see this as a setback or a natural market correction? Let's discuss in the comments. #EVs #ElectricVehicles #Nikola #Sustainability #LinkedInNews I am Dr. Saleh ASHRM 💡 Certified LinkedIn creator Top #9 creators LinkedIn Syria Top #1 Corporate Finance Syria The Sustainability Ambassador by The SPSC - UK Ph.D. in Accounting & Advocate for Sustainable Finance Source of picture is Reuters

Greenland is not about territory. It is about Arctic access — security footprint, critical-minerals optionality, and how alliance politics now show up inside capital allocation. Three takeaways matter for business leaders and investors. First, this is about Arctic operating advantage, not sovereignty. The United States does not need to own Greenland to secure what it wants. The objective is forward positioning: missile warning, space surveillance, Arctic air and naval reach, and logistics corridors between North America and Europe. Formal ownership would be politically explosive and unnecessary. What matters is privileged access to infrastructure, ports, airspace, and basing rights. Second, critical minerals are leverage, not near-term production. Greenland’s mineral potential matters less for immediate extraction than for strategic optionality. In a world where China dominates rare-earth processing, even the possibility of alternative supply strengthens negotiating power and investment planning. This is about supply-chain bargaining power over the next decade, not mines coming online tomorrow. Third, this is a signal to allies as much as to rivals. The episode reminds us that security guarantees now come with expectations of alignment. For Europe, it has already triggered a rethink on energy and dependency risk. For smaller partners, it reinforces a new reality: access to U.S. security architecture increasingly travels alongside expectations on infrastructure, resources, and strategic cooperation. So what does this translate into for boardrooms? This is already landing in investment committees from Singapore to London, from New York City to Tokyo, and increasingly in Frankfurt and Abu Dhabi — wherever CEOs, CIOs, and investment committees are making long-duration bets under geopolitical constraint. Concretely, that means: Defense and Arctic-adjacent infrastructure: ports, radar, space monitoring, cold-region logistics Critical-minerals exposure: early positioning via partnerships and offtake, not headline acquisitions Supply-chain redesign: routing, redundancy, inventory strategy for northern corridors Risk pricing: insurance, shipping, and sovereign-interface risk moving into project IRRs Greenland is where this shift becomes visible: in defence contracts and port upgrades, mineral off-take and shipping routes — as supply chains are rerouted and investment committees price Arctic access, logistics resilience, and resource security into real projects. Policymakers will draw lessons too. But the first-order moves are already being made by business leaders and investors allocating capital across a more fragmented operating environment. #Geopolitics #Arctic #CriticalMinerals #Infrastructure #Defense #Investing #SupplyChains #EnergySecurity #GlobalRisk

The #BatteryIndustry is one of the most dynamic markets globally.   While the technological potential is huge, financial and political uncertainties are causing massive short-term changes on the world stage. Western OEMs, in particular, are falling short of their EV sales expectations. In Europe, the future of combustion car sales beyond 2035 remains uncertain, while in the USA, electric vehicle sales could be lower than anticipated by 2030 due to the current administration's stance.   The slowing growth of EV sales, coupled with overcapacity in battery production, is intensifying cost pressures on both EV manufacturers and battery producers. To navigate this highly uncertain economic and geopolitical landscape, regulators must establish a stable regulatory framework that enhances planning security for investors.   These are among the key findings of our latest #BatteryMonitor, prepared by Roland Berger in collaboration with the PEM Chair of RWTH Aachen University. This year's edition offers a comprehensive overview of market developments and outlines strategic options for decision-makers throughout the battery value chain.   ➡️ Wishing you an insightful read: https://lnkd.in/e_by_qgH